Author: Jose Ma Luis Montesclaros, NTU

Much criticism has been levelled towards India’s July 2023 determination to ‘ban’ non-basmati rice exports, which beforehand made up a 3rd of its milled rice exports. Critics have additional argued that the transfer by India, because the world’s largest rice exporter, might harm its declare to lead the Global South, falling removed from its guarantees to handle international meals challenges beneath its 2023 G20 presidency.

India’s export bans may also be seen as irresponsible if pushed not primarily by home meals safety, however quite by political causes. Ahead of the March 2024 elections, there’s a have to appease India’s city center class by lowering mounting meals costs.

The Indian authorities has not but normalised its rice commerce, with the scenario worsening by the month. In 2023, New Delhi imposed additional constraints on parboiled rice, which accounts for 42 per cent of India’s milled rice exports. Rice costs have since spiralled to ranges just like the 2007–08 global food price crisis. As a possible immediate for but extra international locations to hitch the bandwagon, Myanmar has additionally banned rice exports since August 2023.

A small concession got here in late August 2023 when the Indian authorities announced it will enable for exports to international locations going through vital meals safety challenges resembling Bhutan, Mauritius and Singapore, although this has performed little to calm worldwide markets.

In any case, a extra constructive method to partaking India — and meals exporting states extra broadly — ought to start by acknowledging the advanced balancing act they undertake inside the international meals order. Food exporting states maintain a twin mandate of serving as a dependable provider within the worldwide meals market whereas additionally assembly the meals safety wants of their very own populace.

The issue of this twin mandate might be gleaned after Russia’s invasion of Ukraine, when India stepped as much as fill the hole in worldwide wheat exports created by the battle. India elevated wheat exports to over 1.4 million tonnes in April 2022 — roughly five times the exports from April 2021. But elevated wheat exports led to home shortages and a surge in home and worldwide wheat costs, culminating in India’s wheat export ban in May 2022, which continues into 2023.

Apart from banning wheat exports, India additionally rolled back its huge COVID-19 meals distribution program, Pradhan Mantri Garib Kalyan Anna Yojana, on 1 January 2023. The program had beforehand allotted further grains for public distribution to poorer customers, however the authorities determined to reallocate these grains to home markets to quell inflation and appease the city center class.

India’s latest rice export bans might be higher understood as an extension of the issues confronted by its wheat sector. As wheat and rice are substitutes in India’s grain stockpiles, wheat shortages feed into the rice scarcity. This cycle led to a quick rise in home meals costs in mid-2022 and the necessity for a minimal rice export value restriction by September 2022. India’s meals value inflation continued to extend by 11.5 per cent in July 2023, inflicting the federal government to enact the latest rice export restrictions.

Rather than pressuring India into normalising its rice commerce, a simpler method can be to handle the ‘double burden’ that lies on the core of its export restrictions. A multilateral method might be a possible ‘middle way’ to curb the escalation of a world meals value disaster. This method would contain offering worldwide capital help to bridge India’s financing gaps in home subsidisation, guaranteeing inexpensive costs for each its poorer and center class populations. These subsidies might assist complement the true incomes of its inhabitants, conserving meals costs decrease and eradicating the necessity to ban grain exports.

A multilateral method would additionally enable India to proceed exporting rice internationally, premised on the assist it expects to obtain in trade. This answer would compensate India for its function as web meals exporter within the present international meals order. Implementing this multilateral method might construct on the Global Food Import Financing Facility proposed by the UN Food and Agriculture Organization to the International Monetary Fund. This facility goals to assist poorer meals importing international locations going through steadiness of funds constraints or price range shortages and might doubtlessly be prolonged to incorporate India, in addition to different lower-income meals exporting international locations.

Should the Indian rice ban lengthen, international locations that depend upon rice commerce for income, imports and consumption may start to speculate on prices as they search to maximise earnings and minimise prices, doubtlessly triggering a scenario akin to the 2008 international meals value disaster. Though international grain costs would nonetheless enhance with a multilateral answer, the prospects for a worse disaster might be mitigated.

If a world value disaster have been to happen on account of an prolonged Indian export ban, this may little question result in additional value instability. Exploring multilateral options is subsequently essential for an already embattled international meals provide chain, amid Russia’s warfare in Ukraine and projected reductions in crop harvests throughout the El Nino season.

Jose Ma Luis Montesclaros is Research Fellow with the Centre for Non-Traditional Security Studies on the S Rajaratnam School of International Studies, Nanyang Technological University, Singapore.

This EAF commentary expands on an earlier publication in RSIS Commentaries, out there here.